Rachel Hartman
Updated on: October 7, 2024 10:17 pm GMT
The U.S. stock market has experienced increased volatility, particularly following the recent jobs report for August, which showed that the economy added 142,000 jobs—below the expected 161,000 jobs. Despite the job growth, the unemployment rate fell to 4.2%, indicating some positive movement in the labor market. However, the job additions are seen as a sign of a cooling job market, prompting speculation about potential interest rate cuts from the Federal Reserve.
New York Fed President John Williams has endorsed the idea of reducing the federal funds rate, which markets are anticipating may start this month. Analysts suggest the possibility of a 25 to 50 basis point cut, depending on the economic data trends, including inflation figures nearing the Fed’s 2% target.
The stock market reacted negatively to the jobs report despite some initial gains. The S&P 500 and Nasdaq Composite are on track to close out the week with significant losses, with the S&P 500 down about 4%—its worst week of the year—and the Nasdaq down 5.4%. Semiconductor stocks particularly felt the impact, with Broadcom projected to decline more than 8% after giving lower-than-expected revenue guidance.
In after-hours trading, companies such as Bowlero and UiPath reported better-than-expected earnings, leading to gains in their stock prices. However, broader market trends remain bearish, with selling across all S&P 500 sectors and analysts expressing concerns over the potential for a larger economic slowdown.
As the economy starts to slow down, investors are paying close attention to the job market and how the Federal Reserve is reacting. These factors will be important in shaping how people feel about the market and what the economy might look like in the future.
